Understanding Your Credit History
Thinking about buying a house? Then consider your credit
history...the people who lend money do!
How well you have handled your credit obligations in the
past is very important to lenders today. The good news is
that this information, for the most part, is available to
you.
Your credit history is maintained by three different private
credit reporting agencies: Equifax, TransUnion and Experian.
You can order your report by phone or the internet and
charge it to your major credit card if you like. Reports
usually cost about $8 each, but are free to residents of
Colorado, Georgia, Massachusetts, Maryland, New Jersey and
Vermont.
It's a good idea to get a copy of all three reports, because
if an error exists on even one of the reports, it may affect
your chances of getting the loan you want. Your credit
report lists the consumer credit that has been extended to
you over the past seven years. It will show what your
highest balance has been and what your current balance was
on the date last reported by the creditor. It also shows how
many payments you made on time and how many late payments
were late. Late payments are grouped into categories showing
how late you were. For example, if a credit card payment was
over 30 days late one time, it might not be considered too
serious. But if payments were over 60 days late three times,
over 120 days late two times and over 180 days late one
time, you have had a significant problem. That problem could
impact your ability to borrow money.
It just makes sense to find out about your credit and
correct any errors. Regardless of how many credit issues you
have had in the past, there are a couple good points to
remember.
-
Negative credit information can be reported in your
credit file for only seven years. After that, it drops
out and cannot be considered. An exception is
bankruptcy, which can be reported for 10 years. Other
items that won't drop off are past due government loans
and taxes, these types of problems will remain
derogatory until satisfied.
- Lenders are much more concerned about how you have
handled your credit in the most recent 12 months than
with what happened several years ago. Even if you have
had a bankruptcy, if you have maintained good credit and
paid your bills on time since then, it is possible you
may qualify for a loan after two or three years.
One of the
newest and best developments in the world of lending has
been risk-based pricing. That's a term used by lenders to
offer higher or lower priced loans to borrowers based on
their demonstrated ability to repay. In other words, even if
you have some blemished credit, you can still likely get a
loan. It just may cost you a little more.
Equifax
(www.equifax.com)
can be reached at 800-997-2493.
TransUnion
(www.transunion.com)
can be reached at 800-888-4213.
Experian
(www.experian.com)
can be reached at 888-397-3742.
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